- Probate is a court certificate confirming the will’s validity and the estate trustee’s authority.
- It is not always required. Whether it is depends on what the estate holds.
- Estate administration tax is calculated on the value of the estate passing under the certificate.
- Jointly held property and assets with a named beneficiary generally fall outside it.
What probate actually is
Probate is the process of obtaining a Certificate of Appointment of Estate Trustee. It is the court confirming that the will is the last valid will and that the person named is authorised to deal with the estate.
The name people use is older than the current terminology, but the function is unchanged: it gives third parties assurance that they can safely deal with the estate trustee.
When it is needed
Probate is required when someone holding an asset insists on it before releasing or transferring it. In practice that means:
- Real property that is not held jointly, since the land registry generally requires it.
- Financial institutions holding significant balances. Thresholds vary between institutions and are a matter of internal policy rather than law.
- Investment accounts held solely in the deceased’s name.
- Where the will’s validity is in question, or there is a dispute among beneficiaries.
Conversely, a small estate consisting of a jointly held home, a joint bank account and registered plans with named beneficiaries may need no certificate at all.
Estate administration tax
Ontario charges estate administration tax on the value of the estate that passes under the certificate. It is calculated on the value of assets included in the application, and the current rates and the value threshold below which no tax applies are set by legislation and should be confirmed at the time, since they have changed.
The key structural point is that the tax applies to what passes through the estate. Assets that pass outside it are not included in the calculation.
Estates below the prescribed threshold are exempt, and a simplified process exists for small estates, which is worth investigating before assuming a full application is necessary.
What passes outside the estate
Several categories commonly bypass probate:
- Joint tenancy with right of survivorship. The survivor takes by operation of law.
- Registered plans with a named beneficiary. RRSPs, RRIFs and TFSAs where a beneficiary is designated.
- Life insurance with a named beneficiary. Paid directly to that person.
- Assets held in certain trusts established during the deceased’s lifetime.
A warning about joint ownership as a planning tool. Adding an adult child to title to avoid probate is common and frequently causes more problems than it solves: it can expose the asset to the child’s creditors or matrimonial claims, it can trigger tax consequences, and it can produce litigation between siblings over whether the survivor takes beneficially or holds in trust for the estate. The tax saved is often small compared with the risk created.
The process
An application is filed with the Superior Court of Justice, including the original will, an estate information return setting out the assets and values, and the required forms. Notice must generally be given to beneficiaries.
Processing times vary considerably by court location. The estate trustee should not assume a quick turnaround, and should plan for the estate being unable to deal with major assets until the certificate issues.
A further return may be required if asset values are later revised.
The estate trustee’s position
Obtaining the certificate is the beginning rather than the end. The trustee must identify and secure assets, pay debts, deal with the deceased’s final and estate tax filings, obtain a clearance certificate from the Canada Revenue Agency before distributing, keep proper accounts, and distribute according to the will.
Distributing before a clearance certificate is obtained is a well-known way for a trustee to become personally liable for unpaid tax. It is one of the most common and most expensive errors in estate administration.
Common questions
How long does probate take?
It varies significantly by court location and by the completeness of the application. Estate trustees should plan for months rather than weeks.
Can probate be avoided entirely?
Sometimes, through beneficiary designations and joint ownership, but each carries its own risks. Avoiding probate is not automatically the right objective.
Who pays the estate administration tax?
The estate, from estate funds. It is generally payable when the application is filed.
What if the original will cannot be found?
A copy may be admitted in some circumstances, but where the original was last in the testator’s possession there is a presumption it was destroyed with intent to revoke. It is a difficult application.
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